Digtal 100s Charts with Corresponding Underlying Cash or Future

[Guest GA]

In the new platform, Digital 100s products are display with chart of the underlying instrument. Please ensure that the chart display corresponds with the exact underlying (cash or future) use as reference for settlement to avoid confusion as Digital 100s product can be settled based on underlying cash or futures price. 

Example: The Hong Kong HS50 Digital 100s Daily use futures price as reference but the chart display used the Hong Kong HS50 Cash price instead of Hong Kong HS50 future price

[JamesIG]

Hi, thanks for the question regarding the settlement of the digital 100's. There are inherently different products to anything else on the IG platform, including both DFB, cash markets, or futures, and therefore settle very differently. Let me break down how each of these are priced and settle below. 

 

Index DFB or cash market: taken from the front month future and adjusted for fair value and dividends (where appropriate). 

Future: Taken directly from the underlying futures market and a spread is wrapped around it.

Digital 100: this is a volatility product, not a tracker, but will settle basis the underlying markets spot price at that time. This will be different to the future and cash/DFB price, but for transparency it will settle basis this spot price which is in the system at that exact time. This is the most accurate and fair way to settle these types of bets. 

 

I hope this gives a bit of clarification on this, but please let me know if any further assistance is required. 

[Guest GA]

Hi James, thank you for the clarification on difference between cash and future price. The difference between cash and future prices is the reason that I would suggest for a corresponding (cash or future) price chart to be displayed with the corresponding Digital 100s Indices products as different Digital 100s Indices products use cash or future price as reference at expiry.

 

For example
1. Refer to the screenshot with Digital 100s US500 Daily and Digital 100s US500 Weekly; the US500 Daily expiry is reference to official close of SPX500 Index, the US500 Weekly expiry is reference to S&P 500 Index futures at close on Friday. Charts display next to both the Digital 100s US500 Daily and Weekly are the US500 Cash price, while there are US500 Cash price and US500 Mar 18 future price charts available and showing different prices.

(Suggest to display the US500 Future price chart with the Digital 100s US500 Weekly instead of US500 Cash price chart)

 

2. Refer to the screenshot with Digital 100s Hong Kong HS50 Daily, the Digital 100s Hong Kong HS50 Daily is reference to Index futures at close. Charts display next to the Digital 100s Hong Kong HS50 is the Hong Kong HS50 Cash price, while there are Hong Kong HS50 Cash price and Hong Kong HS50 Feb 18 future price charts available and showing different prices.
(Suggest to display the Hong Kong HS50 future price chart with the Digital 100s Hong Kong HS50 Daily instead of Hong Kong HS50 Cash price chart)

 

3. Refer to the screenshot with Digital 100s German 30 Daily and Digital 100s German 30 Weekly, both use the cash price as reference at expiry and the cash price chart is displayed
(No change suggested)

Please advice, thank you.

[JamesIG]

Hi - I'm not sure I understand your point. Every Digital 100 (irrespective of them having a weekly / daily / monthly settlement) will settle against the underlying index cash market at that time. The closest chart to this price which we can project will be the IG DFB or cash price, and therefore the most representative chart when making a decision. If you project a futures chart then there would be a significant different between the chart and the settlement. 

 

Maybe I have misinterpreted your statement, so if I have please let me know.

[Guest GA]

Hi James, NOT ALL Digital 100s Indices products settle against the underlying index cash market at that time, these information are stated in the Expiry section of the Digital 100s Indices products specifications as per multiple screenshots attached. Please read the products specifications. Unless the Digital 100s Indices products specifications on the new platforms is inaccurate or otherwise, Digital 100s Indices products could settle against the underlying index futures or index cash market.

 

Examples

Digital 100s (US500 Weekly, HS50 Daily and China 300) settle against the underlying index futures

Digital 100s (US500 Daily, Germany30 Daily and Germany30 Weekly) settle against the underlying index cash market

 

As mentioned in previous posts, currently for some Digital 100s Indices product, chart data display does NOT correspond with the settlement reference. 

Examples

Digital 100s Indices (US500 Weekly, HS50 Daily) display cash market data chart instead of futures market data chart.

 

The suggestion is to have the corresponding chart data reference for settlement display along with the Digital 100s Indices products

Examples

Hong Kong HS50 future price chart with the Digital 100s Hong Kong HS50 Daily instead of Hong Kong HS50 Cash price chart
US500 Future price chart with the Digital 100s US500 Weekly instead of US500 Cash price chart

 

Hope this clarify

 

[JamesIG]

Apologies - let me try and clarify and sorry for the above misinformation. Most binaries will settle against the underlying cash index, whilst others will settle against the futures. Whether the binary settlement is against the cash index or futures will dictate which chart is displayed and is the most accurate. The S&P daily and weekly binary is relatively unique in that the indicative charts need to have the same EPIC which both are quoted off, and therefore there isn't a difference between these web trading charts. This discrepancy should be very small, especially over the relatively short time frame. Further more, as with all charts, this will be indicative. 

[Guest GA]

Dear James

 

Please advice on following questions, thank you.

1. What is EPIC?

2. In what sense are the S&P daily and weekly binary relatively unique in that the indicative charts need to have the same EPIC?

3. Price difference between cash and futures can stay significantly different for a long period depends on various factors, therefore having respective cash or future chart display along with Digital 100s indices product can be of significance. 
For example the HS50 Cash and Future price charts are of 50 points difference for the past few days (refer to past screenshots), which cover 2 strike prices at 20 points interval for Digital 100s HS50

4.Since all charts are indicative, Should IG take this chance to improve the service quality by displaying price charts with real time cash and futures from respective data provider and exchanges because Digital 100s Indices products reference to exact price of external data at expiry?

[JamesIG]

---

1. What is EPIC?

---

An EPIC code is simply an abbreviation code which is used to differentiate between assets and expiry's (and therefore chart types). 

2. In what sense are the S&P daily and weekly binary relatively unique in that the indicative charts need to have the same EPIC?

---

S&P daily will settle against the underlying cash index, whilst the weekly will settle against the index futures. Both, however, will have an indicative chart of the IG derived and fair value adjusted cash price.

3. Price difference between cash and futures can stay significantly different for a long period depends on various factors, therefore having respective cash or future chart display along with Digital 100s indices product can be of significance. 

For example the HS50 Cash and Future price charts are of 50 points difference for the past few days (refer to past screenshots), which cover 2 strike prices at 20 points interval for Digital 100s HS50

To me this reads as a statement?

4.Since all charts are indicative, Should IG take this chance to improve the service quality by displaying price charts with real time cash and futures from respective data provider and exchanges because Digital 100s Indices products reference to exact price of external data at expiry?

I can certainly pass this on, however I know there are significant costs associated with such an option, and given the fact this hasn't changed for years, I doubt it would change now. 

[Guest GA]

Point 3 is in response to your earlier reply " This discrepancy should be very small, especially over the relatively short time frame. " regarding cash and futures price difference of SP500, which may not apply to other indices. Hence a need to display cash or future price chart along with Digital 100s indices product to reflect a closer approximation for customer to reference with when making decision. 

[JamesIG]

---

wrote:

Point 3 is in response to your earlier reply "

This discrepancy should be very small, especially over the relatively short time frame.

" regarding cash and futures price difference of SP500, which may not apply to other indices. Hence a need to display cash or future price chart along with Digital 100s indices product to reflect a closer approximation for customer to reference with when making decision. 

---

ah ok, makes sense. The S&P binary in question was what I was referring to where the chart will be the same for both the weekly and daily. Although there will of course be large differences between some other indices (especially is they have a large integer value to start with) S&P is generally small. I will pass your sentiment onto the desk, but at present I doubt this is likely to change given the scale of the difference. 

[Guest GA]

What objective measure of difference between cash and future price is consider as significant by IG to implement this change?